Your camera shoots AVI video using the MJPEG codec which, as you know, is not supported by Premiere Elements.
Your best choice for editing this type of video is Windows MovieMaker or the editing software, if any, that came with your camera.
Welcome to the forum.
For some background on the AVI "wrapper," see this ARTICLE.
For background on CODEC's, in general, see this ARTICLE.
I trust that Steve is correct, about the MJPEG CODEC, being inside of the AVI wrapper. If so, then see this ARTICLE on the MJPEG CODEC.
Now, your Pentax should have come with a utility disc. That should contain the Pentax version of the MJPEG CODEC. It might be an individual install, might be part of the camera's driver, or, more likely, will install with some editing/cataloging software, on that disc. As most camera mfgrs. like to tweak the CODEC's, it could well be, that with that CODEC properly installed, the footage will edit fine. However, it could well be that Pentax has tweaked it to the point, that PrE cannot use it. One should install the CODEC, and then test. See the second link above for more detail on NLE (Non Linear Editor) programs and CODEC's.
Good luck, and hopefully just by installing the Pentax version, then PrE will work with it. If not, a possible option would be to install either the Morgan, or MainConcept MJPEG CODEC, but using the one from Pentax would be the ideal.